Specific Reduction and Exemption refers to the reduction or exemption of tariffs, import VAT, consumption tax, and other taxes granted by a country's customs or tax authorities, in accordance with national laws, regulations, or policies, on import and export goods under specific regions, specific enterprises, specific uses, or specific trade modes. Its application scenarios mainly include: goods within special regions such as bonded zones, export processing zones, and pilot free trade zones; imports for specific uses such as encouraged foreign-invested projects, major technical equipment, and scientific and technological innovation supplies; and specific trade modes such as processing trade and compensation trade. Precautions: Specific reduction and exemption usually require prior filing or approval, have strict scope of use and supervision conditions, and unauthorized diversion or transfer may result in tax recovery and penalties. Unlike 'statutory reduction and exemption', specific reduction and exemption is temporary, policy-oriented, and targeted at specific objects; compared with 'general reduction and exemption', it does not apply to all taxpayers but only to specific situations. Foreign trade practitioners need to accurately understand the applicable conditions of the policy, declare in compliance, and avoid legal risks.
📝 Examples
1. Our company, as an encouraged industry enterprise registered in the Hainan Free Trade Port, imports a batch of self-use production equipment. According to the 'Zero Tariff Policy for Self-use Production Equipment in Hainan Free Trade Port', we can apply for specific reduction and exemption, exempting tariffs and import VAT. (Note: tax reduction and exemption under specific regional and industrial policies)
2. An enterprise imports a batch of raw materials through processing trade. Because it falls within the scope of specific reduction and exemption, customs grants bonded treatment, temporarily not levying import tariffs and VAT, and the bond is verified and cancelled after the processed finished products are exported. (Note: reduction and exemption under specific trade modes, subject to subsequent customs supervision)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
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